CME Group upgraded to Neutral at BofA ahead of ‘next crisis’

As previously reported, BofA analyst Craig Siegenthaler upgraded CME Group to Neutral from Underperform with a price target of $204, up from $167. While volumes are now declining following CME’s “best back-to-back growth years since ’17/’18,” and the firm expects EPS growth to decelerate to 6% in 2024-25, the firm is “taking a contrarian view” and doesn’t want to be Underperform-rated on the stock into the “next crisis,” the analyst tells investors. When the two-year Treasury yield peaks, there “has been a crisis 100% of the time over the last 50 years,” says the firm, which notes that CME’s stock has a history of significant outperformance over short market dislocations. Given this context, the firm calls it “prudent” to raise its rating “before (and not after) the next crisis while the VIX and CME’s valuation are lower.”